Information Bulletin: New Federal Rules for Patented Drug Pricing Announced

The final amendments to the Patented Medicines Regulations will be released on August 21, 2019. These amendments give the Patented Medicine Prices Review Board (PMPRB) new tools to address drug pricing and the affordability of patented medicines. The amended Regulations represent the first major reform to the pricing rules in over 30 years and are scheduled to come into force on July 1, 2020.

Among other things, the amendments will:

• update the "basket" of comparator countries used when setting drug prices, such that price comparisons are made against countries that resemble Canada in terms of population, economy and approach to health care.
• provide the PMPRB with the actual market price of medicines in Canada—rather than a “list” or "sticker" price not factoring applicable adjustments —to more accurately assess whether a price is reasonable when setting a price ceiling.
• allow the PMPRB to consider whether the price of a drug actually reflects the value it has for patients (pharmacoeconomic value).

Note that the PMPRB regulates pricing for patented drugs; generic drug pricing is determined through either the panCanadian Pharmaceutical Alliance or via provincial policies.

Detailed stakeholder consultations were held prior to the adoption of these reforms. Aon participated in this exercise to express support for reforms, many of which have now been implemented, that would promote the financial sustainability of private drug plans. Though the effect of the new regulatory framework on private plans is unknown at this early stage, it may lead to lower prices for patented medicines. It could also indicate a more stable and predictable annual expense framework for private plans and provide assurances that where large expenses are incurred on a one-time or ongoing basis, they are truly justified and represent the most effective treatment option on the market.

The revised Patented Medicines Regulations contribute to ongoing discussions about the federal government’s National Pharmacare initiative and are considered by the government to be foundational in respect of its pharmacare strategy. Aon is closely monitoring developments in this area and will provide updates as the federal strategy unfolds.

Contact Information

Contact your Aon Consultant for more information on this subject and to discuss the issues and opportunities within your organization.